1. The validity of a state statute under the Federal
Constitution does not appear to have been drawn in question in this
suit in the state courts challenging tax assessments, and an appeal
under § 237(a) of the Judicial Code as amended is unauthorized;
but, under § 237(c), certiorari is granted, since appellants
properly raised the question of the validity of the assessments
under the equal protection clause of the Federal Constitution. Pp.
324 U. S. 184,
324 U. S.
187.
Page 324 U. S. 183
2. Even where the federal question has been properly raised and
decided in the state courts, an appeal under § 237(a) maybe
dismissed where appellants fail to attack a statute explicitly in
their assignments of error here. P.
324 U. S.
187.
3. Since the equal protection clause of the Fourteenth Amendment
does not operate to bar taxation which does not, in fact, bear
unequally on persons or property of the same class, mere
differences in modes of assessment not shown to produce such
inequality are not forbidden. P.
324 U. S.
190.
4. Nor does the equal protection clause prohibit inequality in
taxation which results from mere mistake or error in judgment of
tax officials, or which is not shown to be the result of
intentional or systematic undervaluation of some, but not all, of
the taxed property in a single class. P.
324 U. S.
190.
5. The burden of establishing the unconstitutionality of
assessments for taxation is upon the protestant. P.
324 U.S. 191.
6. Appellant loan associations failed to sustain the burden of
showing that state tax officials, who assessed appellants' property
for state taxation at its full value, denied to appellants the
equal protection of the laws, guaranteed by the Fourteenth
Amendment, by their mode of valuation, for taxation, of property of
the same class belonging to other taxpayers. P.
324 U. S.
192.
126 W.Va. 506, 30 S.E.2d 513, affirmed.
Appeal from a judgment sustaining the validity of assessments
for state taxation.
MR. CHIEF JUSTICE STONE delivered the opinion of the Court.
The question is whether the tax officials of West Virginia, who
have assessed appellants' property for state taxation at its full
value, have denied to appellants the equal protection of the laws,
guaranteed by the Fourteenth
Page 324 U. S. 184
Amendment, by their mode of valuation, for taxation, of property
of the same class belonging to other taxpayers.
Appellants are three Federal Savings and Loan Associations,
organized under federal laws, and one Building and Loan
Association, organized under state laws. They filed petitions with
the county court of Kanawha County, West Virginia, seeking a review
and reduction of the 1941 assessment of their property for taxation
by the county assessor. They alleged that their property was
assessed at a proportionately higher assessment valuation than the
property of other taxpayers, and that such assessment was unequal
and discriminatory, in contravention of the state constitution and
the Fourteenth Amendment to the federal Constitution.
The county court, sitting as a Board of Review, reduced the
assessments after a hearing. On appeal, the Circuit Court for
Kanawha County reversed the determination of the county court and
reestablished the assessments. The Supreme Court of Appeals of West
Virginia, the highest court of the state, affirmed, 30 S.E.2d 513,
holding that appellants had failed to make such a clear showing of
the unequal effect of the tax as to justify their complaint.
The case comes here on appeal from the judgment of the Supreme
Court of Appeals of West Virginia, purporting to have been taken
under § 237(a) of the Judicial Code as amended, 28 U.S.C. § 344(a),
which authorizes an appeal from the
"final judgment or decree in any suit in the highest court of a
State in which a decision in the suit could be had . . . where is
drawn in question the validity of a statute of any State on the
ground of its being repugnant to the Constitution . . and the
decision is in favor of its validity."
In their protests against the assessments, filed with the county
court, appellants did not draw in question the validity of any
statute. They alleged
Page 324 U. S. 185
only that the assessments were not uniform and equal with the
assessments of other property owners, and that they violated the
Fourteenth Amendment. And, in their petition for appeal to the
Supreme Court of Appeals of West Virginia, appellants contended
only that the assessments denied to them equal protection of the
laws in violation of the Fourteenth Amendment.
It is essential to our jurisdiction on appeal under § 237(a)
that there be an explicit and timely insistence in the state courts
that a state statute, as applied, is repugnant to the federal
Constitution, treaties or laws.
Loeber v. Schroeder,
149 U. S. 580,
149 U. S. 585;
Erie R. Co. v. Purdy, 185 U. S. 148,
185 U. S.
153-154;
Fullerton v. Texas, 196 U.
S. 192,
196 U. S. 193;
Corkran Oil Co. v. Arnaudet, 199 U.
S. 182,
199 U. S. 193;
Wall v. Chesapeake & Ohio R. Co., 256 U.
S. 125,
256 U. S. 126;
Citizens' National Bank v. Durr, 257 U. S.
99,
257 U. S. 106;
Thornton v. Mississippi, 323 U.S. 668;
Carter v.
General American Life Ins. Co., 323 U.S. 676;
Putzier v.
Richardson, 323 U.S. 677. And it has long been settled that an
attack upon a tax assessment or levy, such as appellants here made,
on the ground that it infringes a taxpayer's federal rights,
privileges, or immunities will not sustain an appeal under §
237(a).
Jett Bros. Co. v. City of Carrollton, 252 U. S.
1;
Citizens' National Bank v. Durr, supra; Indian
Territory Illuminating Oil Co. v. Board of Equalization, 287
U.S. 573;
Miller v. Board of County Comm'rs, 290 U.S. 586;
Baltimore National Bank v. State Tax Comm'n, 296 U.S. 538;
Irvine v. Spaeth, 314 U.S. 575;
Memphis Gas Co. v.
Beeler, 315 U. S. 649,
315 U. S. 650;
Commercial Credit Co. v. O'Brien, 323 U.S. 665;
see Ex
parte Williams, 277 U. S. 267,
277 U. S. 272;
cf. Reeves v. Williamson, 317 U.S. 593.
Where it appears from the opinion of the state court of last
resort that a state statute was drawn in question as repugnant to
the Constitution and that the decision of the court was in favor of
its validity, we have jurisdiction on appeal. For we need not
inquire how and when the
Page 324 U. S. 186
question of the validity of the statute was raised when such
question appears to have been actually considered and decided by
that court.
Manhattan Life Ins. Co. v. Cohen, 234 U.
S. 123,
234 U. S. 134;
Chicago, R.I. & P. R. Co. v. Perry, 259 U.
S. 548,
259 U. S. 551;
Saltonstall v. Saltonstall, 276 U.
S. 260,
276 U. S. 267;
Home Ins. Co. v. Dick, 281 U. S. 397,
281 U. S. 407;
Nickey v. Mississippi, 292 U. S. 393,
292 U. S. 394;
Whitfield v. Ohio, 297 U. S. 431,
297 U. S.
435-436. But it does not appear from the opinion of the
Supreme Court of Appeals that the federal question was presented to
or considered by that court. While the opinion intimates that
appellants' objection was made to the administration of the
statute, it nowhere indicates that they contended that, as applied,
the statute was invalid as repugnant to the federal Constitution.
*
Page 324 U. S. 187
Appellants in their assignment of errors in this Court have
failed to attack the state statute as repugnant to the
Constitution, stating only that the finding and judgment below
sustaining the assessment violate the equal protection clause. Even
where the federal question has been properly raised below, an
appeal under § 237(a) may be dismissed where appellants fail to
attack a statute explicitly in their assignments of error here.
Cady v. Georgia, 323 U.S. 676;
cf. Herbring v.
Lee, 280 U. S. 111,
280 U. S. 117;
Seaboard Air Line R. v. Watson, 287 U. S.
86,
287 U. S. 91;
Flournoy v. Wiener, 321 U. S. 253.
For these reasons, we grant appellee's motion to dismiss the
appeal. Treating the papers on which the appeal was allowed as a
petition for writ of certiorari, as required by § 237(c) of the
Judicial Code, as amended, 28 U.S.C. § 344(c), certiorari is
granted, since appellants have properly attacked the validity of
the assessments under the equal protection clause of the Fourteenth
Amendment, and we proceed to consider the merits.
Section 14a of Chapter 11, Article III of the West Virginia Code
of 1943, provides that
"the capital of every building and loan association and federal
savings and loan association, as represented or evidenced by the
investment shares and investment accounts in such association,
shall be assessed at its true and actual value. . . . The real and
actual value of such capital, represented by the market value of
such investment shares and investment accounts as aforesaid, shall
be ascertained according to the best information which the assessor
may be able to obtain. . . ."
Section 1 of the same chapter and article provides: "All
property shall be assessed annually as of the first day of
Page 324 U. S. 188
January at its true and actual value. . . ." And Article 10, § 1
of the Constitution of West Virginia provides:
". . . taxation shall be equal and uniform throughout the State,
and all property, both real and personal, shall be taxed in
proportion to its value, to be ascertained as directed by law. No
one species of property from which a tax may be collected shall be
taxed higher than any other species of property of equal
value."
This section of the constitution also provides for the division
of all taxable property into four classes, with a prescribed
limitation on the amount of tax which may be levied upon each
class. Class 1 consists of "personal property employed exclusively
in agriculture, . . . products of agriculture, . . . including
livestock, while owned by the producer," and includes "money,
notes, bonds, bills and accounts receivable, stocks, and other
similar intangible personal property," which is the class of
property for which appellants are taxed.
Notwithstanding these provisions of the constitution and
statutes of the state, it appears from the evidence, and the state
Court of Appeals found, that, in 1941, and since, the assessor of
Kanawha County, following the instructions of the state tax
commissioner, employer a different method in the valuation and
assessment of the property of building and loan associations and
federal savings and loan associations, including appellants, from
that employed in assessing Class I property of other taxpayers. It
is this difference in the mode of assessing the property of
different taxpayers which petitioners contend has resulted in
taxing the property of appellants at its full value and like
property of other taxpayers at less than its full valuation, in
violation of the equal protection clause.
It appears from the record that the assessor in 1941 for the
first time followed the uniform practice of assessing the capital
of building and loan associations and federal
Page 324 U. S. 189
loan associations as evidenced by their investment shares and
investment accounts, constituting their Class I intangibles at
their full value. But it also appears that, in assessing other
taxpayers on their Class I property, the assessor varied his method
of assessment as to different types of property included in the
class. As to them, he valued money at 100%, bonds, notes and
accounts receivable, except installment accounts at about 70% of
their face value, and installment accounts at 65% of their face
value. Livestock and agricultural products were valued at
approximately 50% of their "purchase value." The accounts
receivable and notes of small loan companies were assessed at about
85% of their face value. It does not appear how commercial banks
and trust companies were assessed, but, for purposes of decision,
the state court assumed that their Class I intangibles were
assessed at their full face value.
The Court of Appeals found that small loan companies and other
taxpayers whose Class I intangibles were taxed at less than their
face value are engaged in a business different from and involving a
greater risk than that in which building and loan associations and
federal savings and loan associations are engaged. It found that
there was a basis for the discount from face value employed in
assessing notes and accounts of small loan associations which was
lacking in the assessment of the higher grade securities held by
building and loan associations and federal savings and loan
associations, whose investments are generally more carefully made
and better secured than those of other classes of taxpayers.
The court concluded that the method of assessment and valuation
employed was not adopted with the purpose of taxing some but not
all Class I property at less than its true value, but as a means of
arriving at its true value. It said:
"We do not have a case where the true and actual value was
ascertained and a discount allowed from that
Page 324 U. S. 190
value, but rather a case where the discount was allowed,
particularly as to intangibles, in an effort to reach the true
value."
While the court thought that this method of assessment might in
some instances be an erroneous performance of the duties of the
assessor, it held that a mere error of judgment as to the mode of
assessment adopted was not sufficient to establish an unlawful
discrimination "where the plan, though imperfect, is adopted in a
good faith effort to secure fair and equitable assessment and
equality and uniformity in taxation."
Appellants argue that denial to them of the equal protection of
the laws is established by the proof of the assessor's
discrimination in his mode of assessment of the same kind of Class
I property belonging to different taxpayers, and that this
discrimination is shown to be "intentional and systematic." But
this argument overlooks the well established rule that the
constitutional prohibition applies only to taxation which in fact
bears unequally on persons or property of the same class, and that
mere differences in modes of assessment do not deny equal
protection unless they are shown to produce such inequality.
Bell's Gap R. Co. v. Pennsylvania, 134 U.
S. 232,
134 U. S. 236;
Home Ins. Co. v. New York, 134 U.
S. 594,
134 U. S. 600;
Adams Express Co. v. Ohio, 165 U.
S. 194,
165 U. S. 229;
Michigan Central R. Co. v. Powers, 201 U.
S. 245,
201 U. S.
298-300;
cf. Hendrick v. Maryland, 235 U.
S. 610;
Gen. Amer. Tank Car Corp. v. Day,
270 U. S. 367;
Interstate Buses Corp. v. Holyoke Street R. Co.,
273 U. S. 45,
273 U. S. 51;
Interstate Buses Corp. v. Bodgett, 276 U.
S. 245,
276 U. S. 251.
Nor does the equal protection clause prohibit inequality in
taxation which results from mere mistake or error in judgment of
tax officials,
Pittsburgh, C., C. & St. L. R. Co. v.
Backus, 154 U. S. 421,
154 U. S. 435;
Courter v. Louisville & N. R. Co., 196 U.
S. 599,
196 U. S. 609;
Brooklyn City R. Co. v. New York, 199 U. S.
48,
199 U. S. 52;
Sioux City Bridge v. Dakota
County, 260
Page 324 U. S. 191
U.S. 441,
260 U. S. 447;
Southern R. Co. v. Watts, 260 U.
S. 519,
260 U. S. 527;
Baker v. Druesedow, 263 U. S. 137,
263 U. S. 142;
Cumberland Coal Co. v. Board, 284 U. S.
23,
284 U. S. 25;
Rowley v. Chicago & Northwestern R. Co., 293 U.
S. 102,
293 U. S. 111;
Great Northern R. Co. v. Weeks, 297 U.
S. 135,
297 U. S. 139;
or which is not shown to be the result of intentional or systematic
undervaluation of some, but not all, of the taxed property in a
single class.
New York v. Barker, 179 U.
S. 279,
179 U. S.
284-285;
Courter v. Louisville & N. R. Co.,
supra; Chicago, B. & Q. R. Co. v. Babcock, 204 U.
S. 585,
204 U. S. 597;
Sunday Lake Iron Co. v. Wakefield, 247 U.
S. 350,
247 U. S. 353;
Sioux City Bridge v. Dakota County, supra, 260 U. S. 447;
Southern R. Co. v. Watts, supra; Snowden v. Hughes,
321 U. S. 1,
321 U. S. 9.
In all these respects, appellants have the burden of
establishing the unconstitutionality of the assessments which they
assail,
Sunday Lake Iron Co. v. Wakefield, supra,
247 U. S. 353,
and cases cited;
Southern R. Co. v. Watts, supra,
260 U. S. 526;
Chicago G.W. R. v. Kendall, 266 U. S.
94,
266 U. S. 99;
Lawrence v. State Tax Comm'n, 286 U.
S. 276,
286 U. S. 284;
Great Northern R. Co. v. Weeks, supra, 297 U. S. 139;
Snowden v. Hughes, supra, 321 U. S. 9, and
they have failed to sustain that burden.
It is plain that the Fourteenth Amendment does not preclude a
state from placing notes and receivables in a different class from
personal property used in agriculture and the products of
agriculture, including livestock, and taxing the two classes
differently, even though the state places them in a single class
for other purposes of taxation.
Bell's Gap R. Co. v.
Pennsylvania, supra, 134 U. S. 237;
Home Ins. Co. v. New York, supra, 134 U. S. 606;
Courter v. Louisville & N. R. Co., supra, 196 U. S.
608-609;
Klein v. Board of Tax Supervisors,
282 U. S. 19.
As we have said, the state court concluded that the discount
from face value allowed in assessing Class I intangibles of various
taxpayers, other than appellants, was for
Page 324 U. S. 192
the purpose of arriving at the true value of the property
assessed. In view of that conclusion, and in the absence of any
finding or persuasive evidence to the contrary, we cannot say that
the allowance of the discounts has in fact resulted in the actual
assessment of the intangibles of taxpayers other than appellants at
less than their true value. Nor can we say that the discounts which
were denied to appellants on their Class I intangibles for the
first time in 1941 were intended to produce inequality in taxation,
or were part of a systematic effort to accomplish that end, or in
fact were more than errors in judgment, if that, in the
administration of the tax laws.
We find no persuasive evidence in the record, and are pointed to
none, from which it could be inferred that the value of Class I
intangibles of small loan companies and other taxpayers in West
Virginia, not subject to the same supervision as appellants, is not
generally less than face value, or that the discount allowed by the
assessor on the intangibles of any given taxpayer or class of
taxpayers has in fact resulted in an assessment at less than their
true value. It follows that appellants have failed to sustain the
burden of showing that the assessments are unconstitutionally
discriminatory, and the judgment must be
Affirmed.
MR. JUSTICE BLACK is of the opinion that the appeal raises no
substantial federal question, and therefore concurs in its
dismissal. For the same reason, he thinks certiorari should be
denied.
* The President of the Supreme Court of Appeals, in allowing the
appeal to this Court, wrote a memorandum opinion to the effect that
the question of the validity of the statute under the Constitution
was raised and decided there. Appellants urge that this indicates
that the appeal is proper. While a certificate of the state court,
made part of the record, to the effect that the federal question in
issue, was decided, there is generally sufficient to sustain our
jurisdiction when it is consistent with the record,
Capital
City Dairy v. Ohio, 183 U. S. 238,
183 U. S. 244;
Marvin v. Trout, 199 U. S. 212,
199 U. S.
222-224;
Cincinnati Packet Co. v. Bay,
200 U. S. 179,
200 U. S. 182;
Consolidated Turnpike v. Norfolk & O.V. R. Co.,
228 U. S. 596,
228 U. S. 599;
Whitney v. California, 274 U. S. 357,
274 U. S.
360-362;
Honeyman v. Hanan, 300 U. S.
14,
300 U. S. 22, a
certificate to the same effect by the presiding justice of the
state appellate court does not suffice, although it may serve to
interpret indefinite or ambiguous evidence in the record, relied
upon to show that the federal question was raised.
Felix v.
Scharnweber, 125 U. S. 54,
125 U. S. 59-60;
Henkel v. Cincinnati, 177 U.S. 170;
Gulf & Ship
Island R. Co. v. Hewes, 183 U. S. 66;
Home for Incurables v. New York, 187 U.
S. 155,
187 U. S. 158;
Fullerton v. Texas, 196 U. S. 192,
196 U. S. 194;
Seaboard Air Line R. v. Duvall, 225 U.
S. 477,
225 U. S. 481;
Connecticut General Life Ins. v. Johnson, 296 U.S. 535;
Purcell v. New York Central R. Co., 296 U.S. 545;
Honeyman v. Hanan, supra, 300 U. S. 18,
and cases cited;
Lisenba v. California, 314 U.
S. 219. The memorandum of the President of the West
Virginia court was not sufficient of itself to establish that
appellants attacked a statute below, nor does the record contain
any evidence which could be relied upon to show that the validity
of a statute was drawn in question.
MR. JUSTICE ROBERTS.
I am of opinion the judgment should be reversed. I think the
evidence is not only without contradiction, but is persuasive, that
persons and corporations whose circumstances are precisely similar
to those of the complaining taxpayers, and persons competing in the
investment
Page 324 U. S. 193
field with them and holding similar security, have been
benefited by assessments purposely intended to discriminate in
their favor, and against the complainants. I think the decision
below plainly runs counter to decisions of this court.
Cumberland Coal Co. v. Board of Revision, 284 U. S.
23;
Iowa-Des Moines National Bank v. Bennett,
284 U. S. 239,
284 U. S. 245;
Concordia Fire Insurance Co. v. Illinois, 292 U.
S. 535.